Dec 08, 2011. /Lesprom Network/. Holmen has conducted a revaluation of its forest holdings, which will positively impact the operating profit in the 4Q by SEK 3.6 billion ($535 million) and the profit after tax by SEK 2.6 billion ($386 million). The revaluation is based on a new harvesting plan and on changed assumptions regarding future price and cost development, as the company said in a press release received by Lesprom Network. The new harvesting plan is based on a thorough inventory of forest holdings. As a result of active silviculture and a better age structure, harvesting over the next ten years can be increased by almost 20% compared with the past ten years. This is a much larger increase than in previous assessments. Even in the periods after the next ten years, it is estimated that harvesting will be considerably higher than in the old harvesting plan. “Our active, long-term forest management work means that, despite an increased harvesting rate, we will be in a position to increase the volume of wood in our forests by 40% over the next 40 years,” comments Sören Petersson, head of Holmen Skog. The new harvesting plan has an impact of SEK 2.4 billion ($356 million) on the valuation of Holmen’s growing forest. In addition to the rate of harvesting, the assumptions regarding future sales prices and costs also play a major role in determining the recognised value of the forest. Over the past few years, both prices and costs have risen more than was previously estimated. In valuing the forest holdings, assumptions about future price and cost inflation have therefore been upgraded, which will have a total impact of SEK 1.2 billion ($178 million) on the value. “The rapid price rises of recent years have been driven by strong demand from the sawmills plus greater use of wood for energy production. Viewed over a longer timeframe, wood prices have risen in line with inflation. The new valuation is based on the view that the forest is an asset that will increase in value over time,” says Magnus Hall, President and CEO of Holmen. Holmen has 1.3 million hectares of land, of which 1 million hectare is productive forest land. Following the revaluation, Holmen’s forest holdings will be reported at SEK 15.8 billion ($2.3 billion) before tax. Based on this value, a deferred tax liability of SEK 4.2 billion ($624 million) is stated, which represents the tax that is expected to be charged against the earnings from harvesting in the future. This means that the growing forest, net after tax, will be included in the Group’s equity at SEK 11.6 billion ($1.7 billion). The revaluation has no effect on the Group’s cash flow.